Can Drug Companies Raise Prices and Live to Tell the Tale?

Health

Makovsky

Wednesday, February 10, 2016

It’s a tough time* to be responsible for marketing a high-priced drug. Recent examples of overnight price increases and high-priced drug launches have generated massive public outcry; last week’s New York Times article is a prime example of damning coverage related to price changes, and the context in which high-cost drugs are received.

Yet, for any variety of reasons, companies continue to make business decisions to set prices high.Is there any hope for their success in this environment?

The shift toward value-based care in our country means that price will continue to be called into question, but savvy communicators know that successful product launches are supported by three “legs”: demonstrated medical need; public/health community support for the product; and patient ability to access the product (including price and/or prior authorization barriers).Take away one or more of the legs, and the effort topples.

That high-priced drugs (or any pricing increase) will be met with scrutiny is a given.The question is, in what environment will that price be received?The following four considerations can help companies to best prepare and position themselves for success.

It’s a tough time* to be responsible for marketing a high-priced drug. Recent examples of overnight price increases and high-priced drug launches have generated massive public outcry; last week’s New York Times article is a prime example of damning coverage related to price changes, and the context in which high-cost drugs are received.

Yet, for any variety of reasons, companies continue to make business decisions to set prices high.Is there any hope for their success in this environment?

The shift toward value-based care in our country means that price will continue to be called into question, but savvy communicators know that successful product launches are supported by three “legs”: demonstrated medical need; public/health community support for the product; and patient ability to access the product (including price and/or prior authorization barriers).Take away one or more of the legs, and the effort topples.

That high-priced drugs (or any pricing increase) will be met with scrutiny is a given.The question is, in what environment will that price be received?The following four considerations can help companies to best prepare and position themselves for success.

1.Provide public health context.The arguments that high prices recoup the cost of R&D, and that the company funds patient assistance programs – both true and important – are no longer enough to satisfy. Announcing the price in a vacuum, without providing the context of individual patient and public health needs to frame the discussion, places the company on the defensive; the price increase appears arbitrary and “yet another example” of drug company greed. Defining the value of the drug, both individual and societal, will not silence all questions or criticism – but it will provide balance.

2.Assume the free flow of information.Even if a pricing decision is not shared widely or proactively, news of the price should be considered “public” as soon as it is shared with any externalIf payers or partners on the supply chain are alerted to the price prior to brand launch, the information could be easily and quickly shared with patient advocates, pundits, and policymakers; if these parties are unhappy with the price, they could even encourage stakeholders to speak out against the company.

3.Empower third-party voices.Patients and journalists alike seek comment and advice from trusted third-parties to help them understand issues of pricing, access and unmet medical need. It’s no secret that patient advocacy and professional organizations can provide important validation and influence when a product – even a high-priced product – is introduced to the market, by sharing perspective on the public health need and value of the drug. Still, building relationships and establishing trust requires time and investment; scheduling a meeting and checking a box does not automatically “enlist” their support. If a product launch or price announcement comes as a surprise, the company can instead face backlash from potentialTaking the time to share transparent updates and review both science and marketing details demonstrates respect for their authority, and reinforces a shared patient-care mission.

4.Put in place infrastructure to address questions.As with any new product, or new effort addressing a public health concern, key stakeholders – from healthcare professionals to patients to hospital formulary decision-makers – will havequestions. Make sure resources are available to clearly and quickly address those questions, as well as any potential barriers to patient access. Without support for prescribers and end-users, the company can invite perceptions that it does not have answers, or is under-prepared.